State Attorneys General throughout the country are seeing an increase in the number of consumers getting bamboozled out of thousands from a new scheme that is a remake on an old sweepstakes scam: the wire transfer.

The old scam works like this: you receive an email from a “National Sweepstakes” representative, typically in Canada, who informs you that you’ve won a million dollar lottery. All that’s needed to transfer the money to your account is a wire transfer of a few hundred dollars for “handling.” The wire transfer is a favorite of con artists because once the cash leaves the mark’s account, it’s often impossible to trace.

The new scam still involves a wire transfer, but instead of an email from a representative of a country showering you with sweepstakes winnings, an exiled royal family member begs for your help in reuniting her with her money. In exchange for accepting her funds into your U.S. account, she will split it with you. She assures you that a small fee will be charged from your account, but only if you provide a confirmation code. The code is bogus, and so is the royal family member. But the get-rich-quick scheme is enticing enough that many consumers are forking over their cash without asking questions (like why it is that the princess is writing to you).

The same rules apply to sweepstakes and money schemes that always have: don’t accept candy from strangers.

On April 6, 2006, the FTC entered judgement against OptIn Global, which advertised, inter alia, home mortgages via e-mail, in violation of the Federal CAN-SPAM Act. Under the Act, companies may not send e-mails that are primarily advertisements unless the e-mail contains an opt-out provision, and truthfully informs the e-mail recipient who is sending the communication and for what purpose.

The judgment calls for OptIn to return the roughly half million in revenue that it made running the advertisements, and adds a penalty of $2.4 million, effectively gutting the company. Finally, it imposes on the company and its affiliated companies (of which there are at least 12 DBAs) specific duties should it advertise in the future, that go beyond the provisions of CAN-SPAM, making it so they Can’t Spam any longer.

Practice Pointer: The Federal CAN-SPAM Act lays out specific guidelines for commercial advertising that must be adhered to in sending e-mail communications that are primarily commercial in nature. Most notably, those guidelines state that the email must:

The Internet Optimization Bureau, an official sounding organization bearing a government-like seal, has been fowarding invoices to unsuspecting domain name owners, directing them to pay upwards of $300.00 to maintain a service these holders never bought in the first place.

The scam seeks to target people who fear that their domain name will be canceled if they don’t renew. The company has used several unfair business practices, including using a government style seal, not properly disclosing that what they are sending is an advertisement, referring to the ad as an “invoice,” and directing it to accounts payable. According to a spokesperson at the FTC, these phony invoices scam great numbers of consumers. This law firm was recently sent 3 separate “invoices” to pay for domain name maintenance that was never purchased in the first place. To download a copy of the invoice, please click here

Under federal and state law, there are specific provisions that address and proscribe using, distributing, or selling a written communication that simulates or is represented falsely to be a document authorized, issued, or approved by a court, an official, a governmental agency, or any other governmental authority, or that creates a false impression about the communication’s source, authorization, or approval. This document has been forwarded to the state attorney general and to the FTC for possible prosecution.

Interestingly, soon after receiving the invoice, this firm received a second communication, rescinding the “invoice,” most likely because it realized it was trying to scam a law firm. To download a copy of this correspondence, click here.

Practice Pointer: Warn clients that they may receive such phony communications, either in the form of an Internet Renewal/Domain Name Renewal, or in the form of a Trademark Maintenance Service. Our policy is to have clienst forward any and all communications requesting money for trademark work or internet work directly to the firm for review. In 100% of the cases, they have been money scams.

Nautilus Group, Inc., which makes the BOWFLEX exercise machine, has just been ordered to pay damages in the millions to plaintiff Icon Health and Fitness.

Judge Tena Campbell upheld the jury’s award ($375,000 for trademark infringement and $7.5 million for false advertising), despite both parties’ motions to adjust the award, finding that the amounts were “supported by the record.”

Icon originally sued Nautilus in 2005 for using the Icon trademark SOFT STRIDER on Nautilus’ exercise machines, and for falsely advertising (in 650 documented instances) that its “power rod” feature was a patented feature. Nautilus plans to appeal the ruling.

Practice Pointer: A quick review of the U.S. Patent and Trademark Office database would have revealed a valid trademark registration for the mark SOFT STRIDER for treadmills. While treadmills and universal-style fitness machines may not be identical, they are sufficiently close to cause confusion.

In a citable decision from the Trademark Trial and Appeal Board at the U.S. Patent and Trademark Office (”PTO”), the Board held inter alia, that (1) an opposer may not maintain a claim of fraud against an applicant if the opposer does not actually allege fraud in its opposition; and (2) an applicant does not automatically commit fraud if it does not use all the goods listed in the application.

In the opposition, the Hualapai Tribe (”Opposer”) sought to remove a mark from consideration at the PTO on the grounds that the applicant (Grand Canyon West Ranch) did not use the mark on all the services listed, as of the filing date of the application. The Opposer, however, asserted that it was not seeking summary judgment based upon fraud. The Board, therefore, dismissed this claim in relevant part.

In looking at whether the applicant’s application for the mark was void for non-use reasons, the Board outlined the distinctions it sees between fraud and simple non-use. In short, the Board stated that “a defendant commits fraud by knowingly making false statements as to a material fact in conjunction with a trademark application or registration”[.] and showing a “complete failure to make use of the mark before filing the application on any of its identified services.” In the instant case, applicant was using the mark for most of the services. Accordingly, the Board accepted the applicant’s amended identification of goods as the appropriate remedy for the infraction. The case is resumed for other reasons.

Practioner query: On the one hand, it seems a reasonable enough remedy to require an applicant to amend its goods based upon actual use, or, in the alternative, amend its application to a 1(b) (intent-to-use) application and file an appropriate statement of use once all the goods in question are being used. On the other hand, if an applicant’s liability for embellishing its goods and services is a hand-slap and a requirement that it amend its goods only if it gets caught, we question the motivation for client to be honest about their actual use.

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